So are companies like Disney doing well or poorly?
Parks are closed but subscription is up...What does this mean for you folks? https://www.theverge.com/2020/4/8/21214236/disney-plus-50-million-subscribers-international-europe-india-netflix
Geez, people learn to read 10-k reports of companies before asking stupid questions on blind. Do you think Blind has definitive answers on anything other than leetcode and gossip and hiring tips?. They'll give you non-researched, and non-analyzed answers. Do you really think you'd gain any knowledge from the answers given here? None of them have a clue about Accounting, or Financial Analysis. Blind is good for internal rumors and gossips and general shitposting that are generally not available for public
Thanks this was very helpful. Stopped reading further after reading your post
Not everyone on here is an engineer. Former Corp Finance Mgr at Disney here.
I'm one of the few non-tech people on here with a background in financial modeling and valuation, so I will weigh in with my 2 cents. Short-term, yes, the pandemic is "good" for streaming services since people are stuck at home with nothing to do. But valuations are long-term and about a company's fundamentals. And it is not at all clear to me that these media companies will emerge stronger after the pandemic. Disney is a conglomerate, much like Amazon is. So when I value Disney, I think the best approach is a sum-of-parts analysis, where you value each of its business units separately and then add them up together. Disney's core businesses are parks/hotels, studio (movies, distribution, and all businesses related to studio produced content), cable & broadcast, and DTC (direct to consumer). All streaming services such as Disney+ and Hulu are under DTC, which is run by executive Kevin Mayer. Due to the pandemic, parks/hotels are hit the hardest, which will obviously have a negative impact on the overall company financial health. Can the other segments make up for the loss? Depends on how quickly things resume to normal. If sports seasons are cancelled through 2020, meaning there is no NFL, that will be crushing for Disney owned ESPN. That channel is a key bread and butter for Disney's cable & broadcast segment due to the money it makes from licensing as well as the fact that it is easily one of the most popular channels on any MVPD package. No sports>ESPN loses its value, with potentially millions of consumers cancelling their cable subscriptions. And studios will get destroyed as well due to the delays in movie releases and shootings. We also could see further fallout if major theater chain AMC (majority owned by Chinese investment firm Dalian Wanda) goes bankrupt. That is far fewer theaters that can be used to sell movie tickets. As for Disney+ and Hulu, streaming is a highly competitive industry with a handful of meaningful players. The cost of entry is simply too high for there to be numerous players. Disney's key advantage is in its unique and diverse intellectual property and name brand. So I think Disney+ will do quite well. I honestly don't get the value of Hulu. Its originals are decisively inferior, and I don't think its vMVPD package (Hulu Live) can carry it across the finish line.
Solid analysis. As for Hulu, it has a few things that create value: 1. TV shows from network and cable. If people want to watch these shows online, any time they want, on any device they want, they can do it on Hulu. And Hulu's user experience is better than Directv Now, etc., so there's a reason for consumers to use Hulu for this rather than other cable streaming services. Shows like This is Us, Survivor, Atlanta and many more. The starting price point of $5.99/mo is extremely compelling for cord cutters. 2. Live TV is actually a compelling offering. $50/mo to get most local sports, news, additional SVOD content (that is only weirdly available of you get Live bc of how the licensing works), and of course most major network and cable channels. Way cheaper than cable TV and you can get it on any device easily. The value of this shows in live customer growth to now be the highest among any live streaming TV service. 3. Easy add-ons for premium cable like HBO. You can't add HBO to Netflix (though you can to Prime Video). 4. Brand recognition. Everyone has heard of Hulu. Many in other countries where they don't even have Hulu yet have heard of Hulu and have a positive association to the brand. This is valuable as Hulu will go international over the next two years. 5. The originals have been very hit or miss. Handmaid's Take really carried the business for a while. But now originals are much better, and are winning more awards. Shows like Little Fires Everywhere, Ramy, Shrill, Wu-Tang an American Saga. 6. Disney is funneling some of their content to Hulu, like all of FX and also IP like High Fidelity that Hulu produced an original series out of. FX has some fantastic shows like Devs and Dave.
Good summary. I do think Hulu has done a good job on the data side and Live has done better than I expected. When I worked at FAANG we considered launching a vMVPD service but decided against it because we didn't see how we can differentiate from other services aside from price. And due to the content cost and customer price elasticity we didn't see a price point that would make it a profitable business. Hulu is unique because it was owned jointly by several large media firms before Disney acquired a majority stake. So it essentially had a generous cash flow to play with and its financials were not scrutinized by investors. Now it has the added benefit of Disney's operational support and IP. I also wonder if there will be cannibalization between Hulu and Disney+ or whether they serve distinct markets.
Long term financially? Not sure. But most of us have been furloughed, myself included. So at least in the short-mid term, to directly answer your question, it means nothing good for us.
I think the parks may open in late summer but the traffic won't get back to normal for another 2 years.
Two years? No. I think a more realistic estimate on that is one year.
It means parks are closed and subscriptions are up
Disney will never be the same. They can’t film movies, they can’t sell park tickets, they can’t sell cruises. I just moved across the country to Orlando to work for Disney and was laid off a month later. Spent six figures to make it happen. This is completely unprecedented. Disney is burning $40 million a day, and making zilch. The parks and cruises could take a year or more to return to normal, if ever. I don’t know what it will look like on the other side, but I guarantee that Disney is going to be recovering for a very long time from this shit storm.
Blame iger
How does it cost six figures to move to another state? And Disney didn't pay relocation fees?
Disney is losing an estimated $30 million a day. Subscriptions are ahead of forecasts for Disney+ but they invested billions in getting to market so they’re years away from that putting the P in the P&L.
This pandemic will last for 12-18 months which will fundamentally change how people consume stuff. People would enjoy watching movies at home vs theaters. Disney will have to adopt and ensure that Disney+ is first class citizen with movie premiers and not afterthought. That will bring down revenue from movies down quite a bit, but they can easily make that difference with merchandise which I am sure will skyrocket after some time. Movie inspired family games are going to make a huge comeback. I thing there is a huge upside with parks and Disney + if I am looking 10 year horizon. Disclaimer: All of the views are my personal opinion.
Family games compete so poorly with other forms of entertainment that it took a pandemic to see their resurgence. Watch it die off as soon as everything reopens. There’s a reason it was dying before this happened.
What companies are “like Disney”?
One thing I just want to point out when talking about streaming services is that yes, while they may gain a few new subscribers during the pandemic, the average load per subscriber is also putting more demand on these systems and causing the profit margin to fall. They don't make more money from you when you are binge watching, they actually make less.
The incremental infrastructure cost is marginal. More viewing hours reduces churn and increases the pricing power.
Additional tech cost is small. The true costs are content and marketing. More streaming>higher retention>higher LTV and lower CAC.
Park and movies are 55% of Disney's revenue.
33-40% of rev. Also all these subscriptions are discounted significantly for the year. Will not be making any profit on em.
In FY 2019 I think it was 38% of revenue.